Global Quest

Sitting at a workstation on the trading room floor of Advent Capital Management L.L.C., Tracy Maitland peers into six computer screens, each flashing real-time stock market updates from around the world. In the background, Bloomberg TV broadcasts market news on a flat-panel monitor, with traders watching every up and down of the firm’s investments. There is an energy in the room, with staffers also keeping at least a corner of an eye trained on online news services. It’s an intense onslaught of data that comes with the territory of managing some $3.1 billion in assets.

“Every minute, we see how we’re doing, and we’re judged on that basis,” says Maitland, the New York City-based firm’s president and chief investment officer. Advent Capital’s team is continually looking at potential investments and assessing whether others are living up to their initial expectations. “We’re constantly researching things around the world,” he says, “so this business is intense in that it never shuts down.”

With 44 employees, the firm’s size belies the varied nature of its operations. Founded by Maitland in 1995, Advent Capital (No. 4 on the BE ASSET MANAGERS list with $3.1 billion in assets under management) specializes in convertibles, equities, and high-yield securities.

Since its inception, Advent Capital has launched three hedge funds and two closed-end mutual funds. The firm’s clientele is predominantly institutional and includes pension funds, foundations, and endowments. “Many people think of us as a hedge fund,” says Edward Johnson Jr., the firm’s chief operating officer, “but we’re not just a hedge fund, we’re a lot more than that.”

All told, last year Advent Capital posted healthy growth in assets under management, increasing 15.5%. This performance was notable because it marks a rebound from a tough 2005, when assets under management fell to $2.7 billion from $3.8 billion in 2004. That year convertible securities took a hit, partly because of declining market volatility. Convertible bonds are a type of bond that can be converted into shares of stock in the issuing company. They are suitable for investors interested in higher dividend payments than the stock might provide and a greater potential for price appreciation than traditional bonds would deliver. Convertibles are sensitive to market volatility because of their conversion option–when volatility is high, convertibles do well as investors anticipate potential gains; when volatility drops significantly, over a period of time, convertibles tend not to do so well.

“Volatility started to plunge after so much money had poured [into convertible funds], and people started running for the exits,” says F. Barry Nelson, senior vice president and former director of research. “So at a time when declining volatility was causing convertibles to cheapen–which in itself was bad for performance–people were redeeming from convertible [hedge] funds, forcing the funds to sell everything in sight.”

Accustomed to the ebb and flow of the market, Advent Capital’s management team continued with its growth plans, and in 2006 sought to expand the firm’s playing field by further enhancing its ability to trade on a 24/7 basis. A key step